Is my wife automatically the beneficiary of my 401k and IRAs, regardless of my beneficiary designations?

Question

I am married and live in Colorado.  Is my wife automatically the beneficiary of 100% of my 401k, my multiple IRA's, and regular savings accounts, regardless of who I have specifically designated as the beneficiaries on those accounts?  I've read conflicting information online regarding this question.  Some say she is the sole beneficiary regardless of who is the designated beneficiary, and others say she is automatically entitled to only 50% of those accounts?  Another way to ask the question is ... can I designate someone other than my wife as the beneficiary of my retirement and savings accounts with the assurance the inheritance goes to that beneficiary, or does my wife receive it all regardless of my beneficiary designations?

Diedre Wachbrit Braverman · Answer

In Colorado, a spouse in entitled to up to 50% of your estate depending on how long you’ve been married. They reach 50% at 10 years. If you designate someone else it can cause expensive court proceedings as your spouse seeks the share to which they are entitled. You could designate your spouse as a 50% beneficiary and the other person(s) could receive the other half. Or you could ensure your spouse gets half of your assets by leaving them more of some assets and less of the retirement account.  
 
One way to make it easy to give your spouse half is to create a revocable living trust, make all your retirement accounts and life insurance payable to that trust as beneficiary then name your spouse to get half of everything.  
 
The income tax advantage of naming a younger beneficiary on your retirement account has all but disappeared. Your spouse can take over the IRA as their own and take RMDs based on their life expectancy. A non-spouse beneficiary has only 10 years to withdraw all the money and pay all the taxes (unless it’s a Roth... good reason to consider a Roth conversion). 
 
Good luck!

Sabra M. Janko · Answer

I agree with the last answer. A spouse can not be disinherited, therefore any disposition that conflicts with the spousal share would create a problem. However, what is right in your case may depend on the totality of your assets and what other assets might be available to her.

Q: Is my wife automatically the beneficiary of my 401k and IRAs, regardless of my beneficiary designations?